Central Problems in the Management of Innovation ANDREW H. VAN DE VEN MANAGEMENT SCIENCE, Vol. 32, No. 5 (1986) 기술경영학협동과정 고윤미, 한상연 2011 Fall Seminar on Technological Innovation

1 Contents Introduction 1 Conclusion 3 Further discussion 4 4 factors and central problems 2

A decline in American productivity and obsolescence of its infrastructure in the 1980’s The need for understanding and managing innovation focus on research and scholarship about organizational mode for innovation ⇒ According to a general management perspective on innovation (Lewin and Minton’s, 1985) this paper begins with key problems confronting general managers Introduction □ Innovation is defined as the development and implementation of new ideas by people who over time engage in transactions with others within an institutional context. 4 Facotors4 central problems New ideaHuman problem of managing attention PeopleProcess problem in managing new ideas into good currency TransactionsStructural problem of managing part-whole relationships Institutional contextStrategic problem of institutional leadership

Innovative Ideas technical innovations(new technologies, products, services) administrative innovations(new procedures, policies, organizational forms) Management of Ideas 2. 4 factors : New Ideas /human problem of managing attention 3 Q1. How and why certain innovative ideas gain good currency? Q2. How and why people pay attention to only certain new ideas and ignore the rest? Fig 1. Managing life cycle of ideas in good currency Q3. How to trigger the action thresholds of individuals to appreciate and pay attention to new ideas, needs and opportunities?

factors : People/process problem in managing new ideas into good currency Management of attention physiological limitations of human beings group and organizational limitations way to management attention → direct personal confrontations with problem → triggering the action thresholds of organizational participants → channeling the action toward constructive ends 2. 4 factors : Transactions/structural problem of managing part-whole relationships Fig 2. Linear sequential coupling compared with simultaneous Coupling of knowledge(Galbraith, 1982) An Innovation is a collective achievement. The transactions are deals or exchanges which tie people together within an institutional framework. The organizational design for a process for integrating all the essential functions, organizational units, and resources.

5 Four inter-related design principles about how to design holographic organizations (Morgan, 1985). ① self-organizing units The principle of operating an autonomous groups and choosing courses of action to solve problems ② Redundant functions The principle of developing an understanding of the innovation in addition to perform their individual assignments ③ Requisite variety The principle of making environmental scanning a responsibility of all unit members ④ Temporal linkage The principle of integrating parts of time(past, present, and future events) into an overall chronology of the innovation process 2. 4 factors : Transactions/structural problem of managing part-whole relationships

factors : Institutional context/strategic problem of institutional leadership Creating intra and extra-organizational infrastructures takes us directly to the strategic problem of innovation, which is institutional leadership. Within the organization, institutional leadership is critical in creating a cultural context that fosters innovation, and in establishing organizational strategy, structure, and systems that facilitate innovation. Figure 3. Institutional and technical processes(Lodahl and Mitchell, 1980)

3. Conclusion 7 To understand the process of innovation from a managerial viewpoint 1) How do innovations develop over time? 2) What kinds of problems will most likely be encountered? 3) What responses are appropriate for managing problems? Suggestion to 4 basic concepts and 4 central problems ⇒ conceptual framework to conduct longitudinal research on the management of innovation To understand the process of innovation from a managerial viewpoint 1) How do innovations develop over time? 2) What kinds of problems will most likely be encountered? 3) What responses are appropriate for managing problems? Suggestion to 4 basic concepts and 4 central problems ⇒ conceptual framework to conduct longitudinal research on the management of innovation Conclusions No systematic evidence to substantiate central problem, implications and proposed solutions in the management of innovation Limitations

8 4 central problemsPoints for implementations Human problem of managing attention (new idea) Recognition and need of new ideas Choice of new ideas Going and killing decision points Process problem in managing new ideas into good currency (people) Organizational culture toward innovation Member of organization : size, composition(career, background, number, etc) Structural problem of managing part-whole relationships (transactions) Structural dimensions : formalization, standardization, centralized, decentralized * Ambidextrous organization Communication and coordination across the divisions Access to external resources Systems support Strategic problem of institutional leadership (institutional context) Implementation of strategic leadership 4. Further Discussion

9 4 Facotors4 central probelms New idea Human problem of managing attention People Process problem in managing new ideas into good currency Transactions Structural problem of managing part- whole relationships Institutional context Strategic problem of institutional leadership IDEO Culture/Process Process/ Management Process/ Management Process/ Organization Process/ Organization Organization/ Management Brainstorming, trial and error, Deep Dive Frequent prototyping, Tech Box Frequent prototyping, Tech Box, Own 5 Phases process, Convergent Flat Organization, Amoeboid growth,, Deep Dive □How can we interpret 4 factors and 4 central problems in this paper with HBR-IDEO Case ? 4. Further Discussion - IDEO case

10 □Based 4 factors and 4 central problems in this paper, what are differences between IDEO, Samsung, and LG ? IDEO Culture Process Organization Management “Quality of Innovation” Samsung LG Vs. 디자인경영센터 10 개국 약 650 명 (‘11) 디자인경영센터 7 개국 약 1,000 명 (‘11) 2006 년 ‘ 제 2 의 디자인 혁명 ’… 독창적 디자인과 유저 인터페이스 체계 구축, 디자인 우수 인력 확보, 창조적이고 자 유로운 조직문화 조성 디자이너들이 기획자, 엔지니어들과 같이 회의하고 좋은 발전방향을 함께 고민하면서 새로운 자극도 받아야 … ( 이건표 LG 디자인 센터장, ‘11.4 월 ) Is the Samsung and LG Innovative? If not or ambiguous, what’s the reason? * This comparison would be just for the creativity and innovativeness 4. Further Discussion - Samsung/LG

11 The matter is Time and Culture to keep the whole process The matter is Time and Culture to keep the whole process Melissa A. Schilling(2010), Strategic Management of technical Innovation The Innovation Funnel Too Long Too Short Inefficient Time and Culture finally turn on Human Time and Culture finally turn on Human □Based 4 factors and 4 central problems in this paper, what are differences between IDEO, Samsung, and LG ? 4. Further Discussion - Samsung/LG

12 비혁신기업의 혁신저해요인 ( 중요도 4 이상 -5 기준 ) 김현호 외 (2009), 2009 년도 한국의 기술혁신조사 : 서비스부문, STEPI □Based 4 factors and 4 central problems in this paper, what are differences between IDEO, Samsung, and LG ? 4. Further Discussion - Samsung/LG

4. Further Discussion – Sustainability of IDEO 13 □Does the IDEO have sustainability from an innovation resource point of view? In this paper and HBR-IDEO, there is no consideration innovation resource Only focus to the internal organization and competency for innovation Source: Report on the survey of Research and Development in Korea-Manufacturing( ) Mil. USD Internal Funding Outsourcing Funding CAGR (Compound Average Growth Rate) (2002~2007) Internal Funding 16.0% Outsourcing Funding 23.7% R&D Expenditure ; Internal Funding Vs. Outsourcing Funding( )

4. Further Discussion – Sustainability of IDEO 14 □Does the IDEO have sustainability from an innovation resource point of view? Service Industry Firm 1Firm 2Firm 3 Firm N IDEO · · · Manufacturing Industry Firm 1Firm 2Firm 3 Firm N SS/LG · · · External Knowledge can be considered one of innovation resource University Institute Other industry firms User Open Innovation Is there any good idea???

4. Further Discussion – Sustainability of IDEO 15 □Does the IDEO have sustainability from an innovation resource point of view? Need to change the Innovation Funnel of IDEO? In an open innovation point of view, how can interpret 4 factors and 4 central problems in this paper? Chesbrough(2003) Shape or length of innovation funnel for efficiency(money, time, etc.) Shape or length of innovation funnel for efficiency(money, time, etc.)

16 Thank you